There has long been a tendency in the U.S. to link economic growth with population growth. Many in the growth industry even argue that you need population growth in order to have economic health. We’ve already looked at aspects of this in some of our previous articles showing various growth industry assertions to be myths. We’ve detailed the nature of some of the data, for example, which refute the claim that residential growth brings in needed tax revenues. Now we turn to the more general linkage between population growth and economic growth.

Myth #4: A community must grow in population to have economic growth
Must a community grow to remain economically healthy or to have economic growth? A 2002 Brookings Institution paper titled, Growth Without Growth, by Dr. Paul Gottlieb, associate director of the Center for Regional Economic Issues, Weatherhead School of Management, Case Western Reserve University, takes a revealing look at this question. Gottlieb examined population growth and per-capita income growth in the hundred largest metropolitan areas in the U.S. from 1990 to 1998. His findings might surprise those who’ve accepted the conventional growth industry claim concerning population growth and a community’s economic health. (They might surprise, as well, those who would expect the Brookings Institution, a generally conservative think tank, always to push a pure “let the market decide” approach. It seems, instead, they’re willing to present a “better, not bigger” view.)

Before looking at the results, it’s important to acknowledge that per-capita income growth does not necessarily tell the whole story of an area’s economic health. As Gottlieb points out, there are factors, such as measures of quality of life, which could be factored into a comprehensive look at the topic. It is, however, a key indicator, and one we need to examine to answer the question at hand.

Omaha doesn’t exist!
As you can see even just by eyeballing the scattergram in Gottlieb’s Figure 1, the study found almost no relationship between population growth and per-capita income growth. He did, however, find 23 metropolitan areas that had population growth below the median for the 100 areas studied, and per-capita income growth above the median. Gottlieb maintains that this is the best position to be in for a city concerned about the costs of growth. These “Wealth Builders,” as he calls them, include Omaha and Pittsburgh. These are the areas exhibiting “growth without growth,” or economic growth with relatively little physical or population growth.

On the other hand he also identified 23 “Growth Magnets,” metropolitan areas with population growth above the median and per-capita income growth below the median, These include San Diego and Wichita. He points out that this is the worst position to be in for cities concerned about the costs of growth.

Recall the conventional growth machine wisdom. It holds that population growth means economic growth, and that without the former you can’t have the latter. Gottlieb shatters the myth, pointing out that if it held there would be no cities in either of the above mentioned categories. But there are cities there. They make up nearly half of those studied. Indeed, Omaha does exist, and shows Gottlieb’s “growth without growth.”

The gist? You don’t need population growth to have per-capita income growth. In fact, it makes no sense to look to growth as a way to boost an area’s economic health as measured by per-capita income.

Bonus tidbits
The article contains a number of passages providing food for thought. One rationalization I’ve heard some use in objecting to growth control is, “We have to provide for those who want to move here.” Gottlieb makes an excellent point on that topic:

Statements [from citizens complaining about population growth threatening to destroy an area’s good qualities] are so widespread - and so deeply felt - that if a local official ignored them she would not be fulfilling her responsibility to her constituents. Local officials were elected to meet the needs of incumbent residents, not necessarily potential in-migrants. To argue otherwise is to deny the very structure built into our federal system of government - or to stretch the definition of the word “constituent” beyond all reason.

One of Gottlieb’s findings may hint at a specific suggestion for our area:

There also appears to be a significant relationship between high technology status and “growth without growth.”

Others in the area have suggested it before: given that commercial property generates positive revenues for a city, while residential creates a deficit, perhaps the careful introduction of more high-tech business would be worth further exploration for MV/Lisbon.

The logical conclusion, according to Gottlieb:

It follows that metropolitan areas have a considerable opportunity to “beat the system” linking population and income growth.

Of course all they really have to beat is the tendency for many to believe the assertions of those driving the growth machine.

Gottlieb’s data are derived from large metropolitan areas, so we cannot simply assume his findings can be generalized to small towns. They are, however, a telling indication that the usual growth industry assumption is untrue. And if that’s the case, we should be more than skeptical when told our small towns need growth to thrive. Add in what we’ve shown of growth industry mythology in other articles, and “skeptical” is too weak a word.